October 18, 2018: Federal Board of Revenue (FBR) has issued a separate and simplified income tax return form for the salaried persons who also have other means of sources where income from salary is more than 50 percent of the total income.
A notification of FBR explained that as per Income Tax Ordinance, 2001, income is classified under five heads of income namely salary, business, house property (rental income), capital gains and other sources.
The separate return form is meant only for persons deriving salary income or a combination of salary income and income from other sources where salary is more than 50 percent of the total income.
Income from other sources is a residual head of income and includes profit on debt (interest income) and various other categories mentioned in section 39 of the Income Tax Ordinance, 2001 which are not included in any other head of income.
It further said that accountability in the return of income for persons deriving salary and other sources income (where salary is more than 50 percent of the total income), under the head, "income from other sources", "profit on debt" has been mentioned and the remaining categories of income specified in section 39 have been shown under "other receipts".
However, the notification clarified that it is to be noted that for persons deriving income from business, house property or capital gains income along with the salary income is required to file the main return form containing all heads of income and not the simplified return form for salary and other sources where salary is more than 50 percent of the total.
Income from rendering of services falls under the head, "Income from business". So any salaried persons who is also deriving income from services would have to file the main return form and not the simplified return form for salaried individuals.
This is because the separate and simplified return form for salaried individuals is not meant to declare services receipts which fall under the head "Income from business".
The main return form contains all heads of income so a professional deriving salary income and service receipts (business income) has to file declaration on the main return form which contains all heads of income.
(APP)
